3Q GDP beats expectations, up 3.9%

November 25, 2014

WASHINGTON (11/26/14)--Real gross domestic product (GDP) climbed by 3.9% in the third quarter--a 0.4% increase from the quarter's initial reading, according to the Bureau of Economic Analysis' second estimate.

GDP jumped by 4.6% in the second quarter (Economy.com Nov. 25).

"Despite the slowing in growth in the third quarter, the performance of the economy has shifted to above-trend gains, near 3%," said Scott Hoyt, Moody's analyst (Economy.com). "The economy has expanded more than 3% in four of the past five quarters."

Personal consumption trends showed that inflation slowed in the third quarter, as it rose only 1.3% after a 2.3% gain in 2Q. Excluding food and energy, inflation climbed 1.4% after a 2% gain in the prior quarter.

Real disposable income rose 2.3%; the savings rate increased by 5%; and corporate profits only climbed by 2.1% after jumping 8.4% in the second quarter.

Gross domestic income, an alternative metric used to gauge the pace of the economy's growth, climbed 4.5% after a 4% increase in the second quarter.

"The nation's economic prospects are improving," Hoyt said. "However, the divergence between the U.S. economy and that of much of the rest of the world is striking. The euro zone is flirting with recession, Japan is struggling to break free from the pull of deflation, and China and much of the rest of the emerging world are at best holding their own."

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